The Indiana General Assembly last week passed legislation amending the burden of proof statute in property tax appeals. The statute, Ind. Code § 6-1.1-15-17.2, assigns the burden of proof to the assessor where the disputed property’s assessment has increased by more than 5% over the prior year’s value. The law has been interpreted by the Tax Court and Indiana Board of Tax Review several times since 2011, when a slightly different version first became law. If signed into law by the Governor, the legislation (Senate Enrolled Act 266) will become effective immediately and apply to all pending appeals. The act modifies or clarifies the law as follows:

  • In determining whether an assessment has increased by more than 5%, the assessment to rely upon for the prior assessment year is the original assessment or, if applicable, the assessment: (1) as last corrected by an assessing official; (2) as stipulated or settled by the taxpayer and the assessing official; or (3) as determined by the reviewing authority (the county board or PTABOA, the Indiana Board of Tax Review, the Indiana Tax Court or Supreme Court).
  • If the assessor fails to meet her burden of proof, the taxpayer may introduce evidence to prove the property’s correct assessed value. If neither party submits evidence proving the property’s value, the assessment reverts to that established for the prior tax year as last corrected by the assessing official, by stipulation or settlement, or as determined by the reviewing authority.
  • Burden-shifting does not apply where the assessment under appeal is based on structural improvements, zoning or uses that were not considered in the assessment for the prior tax year.
  • If the prior year’s value was reduced on appeal by the assessor or reviewing authority, the assessor has the burden of proof regardless of the amount of increase for the property’s gross assessed value. (This is not the case where the property’s value was determined under the income approach.)

These changes will help to protect taxpayers by compelling assessors to support their valuations of properties that have received substantial increases. However, I would like to see an additional change. At times, an assessment increases by more than 5% over the prior year’s value but then flat lines for subsequent years. For example, the property’s 2010 value is $1 million, and its value for 2011 through 2013 is $2 million. The assessor clearly would have the burden of proof on appeal in 2011, but the taxpayer would retain the burden in 2012 and 2013, because the property’s assessed value didn’t increase over the prior year. Ideally, the assessor’s burden should “roll forward” in this circumstance. The assessor should be required to support her assessments with probative evidence in each of those three subsequent years. Hopefully, this can be addressed in a future legislative session.